(Fixes forecast earnings per share to 45 to 55 cents per share,
not 45 to 50 cents, in para 2)
WELLINGTON, March 22 New Zealand dairy giant
Fonterra reported a 2.2 percent rise in
half-year profit on Wednesday, lifted by earnings gains for its
high-value consumer products.
But the world's largest world's largest dairy exporter cut
its guidance for the full year because of dairy market
volatility, reducing forecast earnings per share to 45 to 55
cents per share, from a range of 50 to 60 cents.
"The impact of more volatility in product stream returns in
our ingredients business, some tightening of margins in the
coming months, and the potential for extra milk in the autumn
could result in some pressure on our earnings in the second
half," chairman John Wilson said in a statement.
A recovery in global dairy prices has been welcome relief
for Fonterra's farmer-shareholders since prices plummeted in
2015. However, the turnaround has been bumpy, and the rise has
also eaten into margins by pushing up ingredient costs.
Fonterra said it was also hit in the first half by poor
spring weather, which dampened New Zealand milk collection. Cost
cutting, improved weather since and rising consumer product
sales supported the profit line.
Net profit after tax for the six months to Jan. 31 rose to
NZ$418 million ($294 million), compared with NZ$409 million a
A 30 percent rise in earnings for Fonterra's consumer and
food service showed benefits from its stragegy of expanding from
milk powder wholesaling to products from cheese to yogurt sold
under brands such as Anchor, Anlene and Fresh n' Fruity.
Sales volumes for China and Hong Kong rose by a third,
boosting earnings for that region 41 percent to NZ$96 million.
"We are looking to channel ... our milk into products that
create the most value for our farmers as well as optimising the
farmgate milk price," Chief Executive Officer Theo Spierings
said in a statement.
Fonterra held its forecast farmgate price to NZ$6 per
kilogram. It announced an interim dividend of 20 New Zealand
cents, the same as last year.
($1 = 1.4198 New Zealand dollars)
(Reporting by Tom Westbrook; Editing by Ruth Pitchford)